Rough ride ahead for Maybulk
It’s still struggling with overcapacity
PETALING JAYA: Malaysian Bulk Carriers Bhd (Maybulk) is expected to have a sluggish year ahead as the industry is still struggling to absorb its overcapacity.
The company’s financial performance for the year ended Dec 31, 2011 (FY11) was below estimate, it revealed recently. Maybulk’s net profit was down 61.7% to Rm91.3mil due to lowercharter rates. Revenuefell torm256.3mil from Rm404.2mil previously.
OSK Research said Maybulk’s FY11 core earnings of Rm103.4mil were 18% below estimate but within consensus, with revenue in line.
This year, the research house expected the time charter equivalent (TCE) panamax to be slightly lower this year, while the TCE for handymax and the handysize segments would be stabilising. “However, as 48% of Maybulk’s total dead weight tonne (dwt) comprises pan- amaxes, we still expect revenue to decline by 14.7% in 2012.
“Meanwhile, its average capacity in dwt is expected to grow 9% this year with the delivery of three vessels. One was delivered in January and the remaining two will be delivered in April and October with hiring days growing by the same quantum.
“Due to oversupply concerns and potential risk of further downside in asset value, the incoming capacity for the next two years will be on a charter basis, but with purchase options,” said OSK Research in a recent report.
The global drybulk carrier fleet is divided into four vessel size categories namely capesize vessels of over 80,000 dwt, panamax-vessels of between 60,000 dwt and 80,000 dwt and handysize-vessels up to 30,000 dwt.
On the 2011 performance, Maybulk chief executive officer Kuok Khoon Kuan said although Maybulk reported weaker performance last year, it was still relatively stronger than the industry average.
“Average charter rates for dry bulk carriers was down 36% year-on-year to US$16,519 per day.
“This was in line with the falling Baltic Dry Index (BDI) that averaged at 1,549 points last year against 2,758 points in 2010 due to overcapacity.
“Revenue from the dry bulk segment was down by 39% to Rm214.4mil y-o-y,” he said at the company’s financial result briefing last week.
Dry bulk shipping contributed about 86% of Maybulk’s revenue in 2011.
The average TCE per day was at US$16,519 in 2011, compared with US$25,993 in 2010. For the tanker segment, Kuok said it remained stagnant with Baltic Clean Tanker Index averaging at 720 points in 2011, down 2% previously.
“Although our tankers average charter rates improved 2% to US$12,269 per day in 2011, revenue for the segment fell 24% y-o-y to Rm35mil due to lower revenue days.
“This was because of the scheduled docking for our three product tankers and the downtime while awaiting employment,” he said.
Product tankers made up about 14% of Maybulk’s revenue in 2011.
The average TCE per day for tankers was at US$12,269, compared with US$11,993 in 2010.
Maybulk operated 17 vessels in 2011 against 15 vessels previously.
Maybulk’s share of profit in associate company, namely the POSH Group, also dropped by 6% y-o-y to Rm17mil for the year in review. “In line with our overall performance in 2011, dividends expectation would be lower,” said Kuok.
OSK Research said it expected better number from POSH this year as the offshore vessel sector was seeing better vessel utilisation although rates were still lagging.
“In view of the lower earnings, the dividend declared was lower at 3 sen in 2011 against 10 sen in 2010,” said OSK Research, who is maintaining a “sell” call for Maybulk.